http://en.wikipedia.org/wiki/Allowance#Engineering_and_machi...

Engineering and machining

An allowance in relation to engineering and machining is a planned deviation between an actual dimension and a nominal or theoretical dimension, or between an intermediate-stage dimension and an intended final dimension. The unifying abstract concept is that a certain amount of difference allows for some known factor of compensation or interference. Specific examples are listed below.


[edit] Examples of engineering and machining allowances
Outer dimensions (such as the length of a bar) may be cut intentionally oversize, or inner dimensions (such as the diameter of a hole) may be cut intentionally undersize, to allow for a predictable dimensional change following future cutting, grinding, or heat-treating operations. For example:
the outer diameter of a pin may be ground to 0.0005 inches (0.013 mm) oversize because it is known that subsequent heat-treatment of the pin is going to cause it to shrink by 0.0005 inches (0.013 mm).
A hole may be drilled 0.012 inches (0.30 mm) undersize to allow for the material that will be removed by subsequent reaming.
Outer dimensions (such as the diameter of a railroad car's axle) may be cut intentionally oversize, or inner dimensions (such as the diameter of the railroad car's wheel hub) may be cut intentionally undersize, to allow for an interference fit (press fit).

[edit] Confounding of the engineering concepts of allowance and tolerance
Often the terms allowance and tolerance are used imprecisely and are improperly interchanged in engineering contexts. This is logical because both words generally can relate to the abstract concept of permission—that is, of a limit on what is acceptable. However, in engineering, separate meanings are enforced, as explained below.

A tolerance is the limit of acceptable unintended deviation from a nominal or theoretical dimension. Therefore, a pair of tolerances, upper and lower, defines a range within which an actual dimension may fall while still being acceptable.

In contrast, an allowance is a planned deviation from the nominal or theoretical dimension.

An example of the concept of tolerance is this: A shaft for a machine is intended to be precisely 10 mm in diameter. 10 mm is the nominal dimension. The engineer designing the machine knows that in reality, the grinding operation that produces the final diameter may introduce a certain small-but-unavoidable amount of random error. Therefore, she specifies a tolerance of ±0.001 mm ("plus-or-minus" 0.001 mm). As long as the grinding machine operator can produce a shaft with actual diameter somewhere between 9.999 mm and 10.001 mm, the shaft is acceptable. Understanding how much error is predictable in a process—and how much is easily avoidable; how much is unavoidable (or whose avoidance is possible but simply too expensive to justify); and how much is truly acceptable—involves considerable judgment, intelligence, and experience, which is one reason why some engineers are better than others.